Den Norske Bank (Luxembourg) S.A. v The Ship "Martha Ii"
[1996] FCA 136
•6 MARCH 1996
CATCHWORDS
SHIPPING AND NAVIGATION - Admiralty practice and procedure - ship loaded with mixed cargo under arrest in Port Jackson - cargo consisting of containers of rice and other cargo, liquid plastic in vessel's deep tanks and bulk cargo of mineral sands - more satisfactory facilities for unloading containers and liquid cargo in Port Botany and mineral sands in Port of Newcastle - balancing of considerations relating to the necessity to keep the vessel under arrest secure against considerations relating to safety and integrity of cargo - circumstances in which vessel under arrest might be permitted to sail from one port within the jurisdiction to another.
Admiralty Rules, Rule 49
DEN NORSKE BANK (LUXEMBOURG) S.A. v THE SHIP "MARTHA II"
No. VG70 of 1996
CORAM: SHEPPARD J
PLACE: MELBOURNE
DATE: 6 MARCH 1996
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No. VG70 of 1996
GENERAL DIVISION IN ADMIRALTY )
BETWEEN: DEN NORSKE BANK (LUXEMBOURG) S.A.
Applicant
AND: THE SHIP "MARTHA II"
Respondent
MINUTES OF ORDER
CORAM: SHEPPARD J
PLACE: MELBOURNE
DATE: 6 MARCH 1996
THE COURT ORDERS THAT:
Subject to paragraph 2 the "Martha II" presently under arrest in Port Jackson, New South Wales be permitted whilst under arrest as soon as practical with all despatch and without deviation to:
(a)sail to Port Botany;
(b)discharge at Port Botany all container cargo and bulk liquid cargo now on board;
(c)sail to Port Jackson and proceed directly to a designated lay up berth, buoy or other anchorage and remain there until further order of the court.
Prior to the "Martha II" leaving her present anchorage ABC will pay or cause to be paid to the Admiralty Marshal the sum of AUS$300,000 ("the Fund").
The Marshal will pay forthwith from the Fund all costs, charges, payments and fees incurred of and incidental to the voyages of the "Martha II" from Port Jackson to Port
Botany and from Port Botany to Port Jackson and all movements of the "Martha II" in Port Jackson and Port Botany to the completion of mooring at the designated lay up berth or anchorage in Port Jackson, together with all costs and charges incidental to any discharge of cargo undertaken pursuant to order 1, including but not limited to all:
insurances;
stevedoring costs;
pilotage fees;
port service charges;
wharfage;
mooring and unmooring charges;
unshackling and reshackling charges;
hire of tugs;
line boat charges;
navigation charges;
crew wages and overtime;
bunkers consumed;
watchmen;
and no such costs, charges, payments or fees incurred will be or will be deemed to be a cost of arrest.
The Plaintiff be permitted to place a representative to remain on board the "Martha II" for the period of all voyages by and movements of the Ship under this order.
The Marshal will, in compliance with order 1, take on board the "Martha II" such persons as he shall, in his discretion, deem appropriate for the purpose of retaining the safe custody, control and preservation of the Ship from leaving the anchorage in Port Jackson until its return to the designated lay up berth or anchorage in Port Jackson.
The Plaintiff file any affidavit in support of its application for summary judgment ("the summary judgment
application") and serve the same on the Defendant and Combo Carriers (Luxembourg) S.A. by 12 March 1996.
The Defendant and Combo Carriers (Luxembourg) S.A. file and serve on the Plaintiff any affidavit in opposition in the summary judgment application together with any affidavit in support of the application for release of the "Martha II" from arrest ("the release application") by 26 March 1996.
The Plaintiff in the summary judgment application file and serve on the Defendant and Combo Carriers (Luxembourg) S.A. any affidavit in reply and in the release application file and serve on the Defendant and Combo Carriers (Luxembourg) S.A. any affidavit in opposition by 10 April 1996.
The Defendant and Combo Carriers (Luxembourg) S.A. file and serve on the Plaintiff any affidavit in reply in the release application by 23 April 1996.
10.The summary judgment application and the release application be listed for directions on 29 April 1996.
11.Liberty to apply on 3 hours' notice.
12.Costs of and incidental to the application and this order be reserved.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG70 of 1996
)
GENERAL DIVISION IN ADMIRALTY )
BETWEEN: DEN NORSKE BANK (LUXEMBOURG) S.A.
Plaintiff
AND: THE SHIP "MARTHA II"
Defendant
CORAM: SHEPPARD J
PLACE: MELBOURNE
DATE: 6 MARCH 1996
REASONS FOR JUDGMENT
HIS HONOUR: This is an application for directions made by notice of motion filed on 1 March 1996 on behalf of ABC Container Line NV ("ABC") the time charterer of the vessel "Martha II". The vessel is presently under arrest in Port Jackson. The direction sought is that the marshal be directed to permit the vessel to sail from Port Jackson to the Port of Newcastle and thereafter to Port Botany forthwith to enable the cargo which is on board to be discharged.
The vessel was arrested in the Port of Melbourne pursuant to a warrant of arrest issued on 14 February 1996. On 21 February 1996 Olney J sitting in Melbourne made orders that the Martha II then under arrest at the Port of Melbourne, be permitted, whilst under arrest, to sail to the Port of Sydney to discharge cargo at the Port of Sydney and to load cargo at the Port of Sydney. His Honour also ordered that the plaintiff be permitted to place a representative to remain on board the Martha II for the period of the voyage to Sydney. A number of undertakings were given by ABC amongst which were an undertaking that that company would use its best endeavours to ensure that the Martha II undertook and completed the voyage from Melbourne to Sydney by 25 February without delaying or deviating from the ordinary course of that voyage, that it would pay fees, expenses and other charges incurred by the Martha II in relation to any matters in the orders, that it would pay on demand to the marshal all fees, expenses and other charges including insurance incurred by the marshal in relation to the orders, that it would indemnify the Martha II against any claims made against the marshal in respect of any of the matters in the orders and that the marshal's costs of arrest to date, including port fees, would be paid to the marshal by or on behalf of ABC by 4 p.m. on 22 February 1996. The orders also provided that the marshal might, in compliance with the orders, take on board the Martha II such persons as he should, in his discretion, deem appropriate for the purpose of retaining the safe custody and preservation of the ship whilst under arrest. Prior to those orders being made an appearance had been entered, not by ABC, but by Combo Carriers Luxembourg SA of Billingstad in Norway as owners of the vessel. There was not, at the time the orders were made, any appearance on behalf of ABC which had purported to give the undertakings to which I have referred.
So far as the material before me discloses, both the owners and the charterers are outside the jurisdiction. Neither carries on business in Australia and neither has assets within the jurisdiction except in so far as ships owned by the owners and chartered by the charterers may visit Australian ports from time to time.
Pursuant to the orders made by Olney J, the vessel sailed from Port Phillip to Port Botany. On board the vessel was a representative of the Marshal and two officers of the Australian Protective Service. Also on board was a representative of the plaintiff. On 24 February 1996 I varied the orders made by Olney J by deleting from the orders made by him so much thereof as permitted the vessel to load cargo at Sydney. I also ordered that, following completion of discharge of cargo at Port Botany, the vessel should proceed forthwith to a berth, buoy or other anchorage at Port Jackson to be nominated by the Admiralty Marshal. The orders were made by consent.
On 27 February 1996 there was filed in Court on behalf of ABC a notice of motion seeking a declaration that it was not liable for any costs incurred in moving the vessel from the Patricks' Stevedores berth at Port Botany to Port Jackson or any other berth while the vessel remained under arrest or, in the alternative, the variation of the orders made by Olney J on 21 February 1996 so as to amend the references in those orders from the Port of Sydney to Port Botany. At the time the notice of motion was filed there was still no appearance on behalf of ABC but, on the matter coming into the list that day, the solicitor for ABC undertook to file an appearance on behalf of that company. The file discloses that that appearance was not in fact entered until 29 February 1996 two days after the motion was filed and two days after I made certain orders in the matter. Those orders were that the marshal cause the vessel to move from the terminal at Port Botany to a buoy to be specified by the marshal in Port Jackson and that the costs of the movement of the vessel from Port Botany to Port Jackson were to be part of the costs of the arrest of the vessel. The matter was stood over to a date to be notified with liberty to restore on two hours notice. An order was made transferring the matter from the Victoria District Registry to the New South Wales District Registry of the Court.
I should say at this point, that there is a view that the Port of Sydney includes both Port Botany and Port Jackson. As I understand the position the two ports which are separated by a few miles of sea are administered as one.
The vessel discharged cargo in Port Botany and then proceeded to Port Jackson where it has been moored at a buoy down to the present time. It is in that context that the directions sought in the notice of motion filed on 1 March 1996 arise for consideration. The problem is that the vessel has a mixed cargo on board. The cargo includes containers of rice which I understand are bound for Israel, frozen meat, liquid plastic in the vessel's deep tanks and 10,000 tonnes of mineral sand carried as bulk cargo in one or more of the vessel's holds. It is necessary now to face up to the problem of having this cargo removed from the vessel because it may be that the only course which can now occur is the sale of the vessel. None of the cargo is, of course, under arrest.
There are serious questions about how the cargo is to be removed. The problem that confronts the parties and the Court is that there are not completely satisfactory unloading facilities in Port Jackson to take off the containers or the mineral sands. There is also a question about facilities for the removal of the liquid plastic in the vessel's tanks. The suggestion that has been made on behalf of the charterers of the vessel, ABC, is supported, so far as the cargo of rice is concerned, by the owners of that cargo. They have appeared by their solicitor and have filed applications for discharge pursuant to the provisions of Rule 49(1) of the Admiralty Rules; see also Form 17.
The plaintiff opposes the movement of the vessel from Port Jackson to Port Botany on the ground that any such movement, involving as it does a voyage on the open sea, may occasion risk to the security which it has. In this respect it should be said that the plaintiff claims some $US16,000,000 as mortgagee of the vessel. Furthermore, there has been filed a caveat against release of the vessel on behalf of a second mortgagee, TNT Express (UK) Limited. In passing it may be noted that the agent for ABC is a local company, Combined Shipping Services Pty Limited, which is a wholly owned subsidiary of TNT Limited, as I understand it the Australian TNT company. There has been no appearance for the caveator up to this time.
The movement of the vessel to Port Botany is a matter which potentially raises quite serious problems but these are not nearly so serious as the problem which arises in relation to the removal of the mineral sands. The evidence establishes that, in a perfect world, the only satisfactory place in which these could be unloaded is a TNT facility at Kooragang Island in the Port of Newcastle approximately 60 or 70 nautical miles north of Sydney. It is ABC's application that the vessel be permitted to sail from Port Jackson to Newcastle or from Port Botany to Newcastle after the containers have been unloaded. The evidence is not altogether clear on the point but it would not seem practical to unload the cargo of mineral sands until the containers have been removed because there may be a question of their fouling gear used in the removal of the bulk cargo.
There is evidence that both the containers and the bulk cargo can be taken off at terminals in Sydney. But the evidence is one way in suggesting that this, from the point of view of convenience and cost, may not be as satisfactory as unloading the cargo in Port Botany and the Port of Newcastle would be. Furthermore, it has to be acknowledged that there are risks to the integrity of the cargo of mineral sands if it is unloaded otherwise than in Newcastle. If the vessel is allowed to go to Newcastle, it will need to return to Port Jackson because there is no satisfactory berth or buoy at which the vessel can be detained under arrest for any substantial time in the Port of Newcastle. Thus, on the basis that the vessel goes first to Port Botany and then to the Port of Newcastle, it will return empty to Port Jackson after all unloading has been completed. The plaintiff, through its counsel, has quite naturally expressed grave anxiety about this course saying that it would put the ship at risk both as to perils of the sea and as to the possibility that the ship, although there may be on board a representative of the marshal and members of the Australian Protective Service, might be tempted to make a run for an overseas sanctuary. Apparently its bunkers are sufficient to enable it to travel for five or six days. It runs the risk, of course, that the only places likely to be available to it would be places that would themselves arrest the vessel if it were to call in to a port in any of the countries near to Australia. That would certainly apply if it went to New Zealand and it would be likely to apply if it went to Papua New Guinea.
I have heard evidence from witnesses called on behalf of the parties concerning the question of unloading the vessel. The plaintiff, of course, acknowledges that the vessel must be unloaded in order for a sale to take place. It must be clear of the cargo. Rule 49(3) provides that where a ship is under arrest but its cargo is not, the Court may, on application and subject to such terms and conditions as are just, order the cargo to be discharged from the ship. The provisions of Rule 49(2) are also relevant in this connection.
The evidence called by the parties consists of affidavits made by and oral evidence given by Captain Pyett, a marine surveyor, who was called on behalf of the plaintiff and Mr Moore who says that he is the ABC Australian representative. He, of course, was called on behalf of ABC.
The evidence was given by these two witnesses on 1 March last. I was left in some uncertainty about what I should do and I suggested that an independent report from a surveyor or other appropriate person independent of the parties should be obtained by the marshal. Such a report was made by Captain Bozier of the firm of Avdall & Bozier Pty Limited on 4 March last. In that report there is a description of the facility at Kooragang Island which was inspected by Captain Bozier on 3 March. I do not go to the detail of what he has said about the facilities but I have taken what he has said very much into account. The only terminal in Sydney at which the unloading could take place is a terminal operated by a company Conaust Limited at White Bay. Plainly the discharge operation could be carried out there but the sands would have to be loaded into trucks which would be emptied in an adjacent wharf shed. Captain Bozier said that the wharf shed was used for storing general cargo. It has a tar macadam surface. He said that two areas would be lined with empty 20 foot containers secured together. The cargo would be stored inside the container walls consolidated with a front end loader. Back loading would be carried out with a mobile conveyor system hired from a company in Newcastle. The conveyor would be fed by trucks filled by the front end loader.
Elsewhere in his report Captain Bozier referred to the fact that mineral sands were refined ores of high value. The particular cargo is ilmenite. It is dense and free flowing. High standards of cleanliness are required at all stages of the handling of mineral sands to prevent contamination. Vessel holds have to be prepared to the same standard as for grain with the added provision of "zero tolerance" for rust scale.
In his assessment of the two proposals, Captain Bozier said that the facilities at Kooragang Island were designed and built for the handling of bulk cargoes. The facilities were currently used for handling mineral sands. On the other hand, the facilities at Conaust were used for handling general and break bulk cargo. The proposed arrangements there are untested. The floor surface has small indentations in the tar macadam which would make cleaning difficult prior to use and also vary recovery of maximum cargo when back loading occurred. Captain Bozier's conclusion is that the Kooragang Island alternative is the better one, subject to the maintenance of security of the vessel. In relation to that matter, he said that there was a risk that an attempt could be made by the master of the vessel to remove it from the jurisdiction of the Court. He said that the risk would be at its highest if the vessel discharged the ilmenite in Newcastle and was then directed to return to Port Jackson. At that time it would have no cargo remaining on board. He said that he understood that the vessel had enough bunkers on board for approximately 5 days steaming. That would be sufficient for it to reach Papua New Guinea, New Caledonia, Vanuatu, Fiji or New Zealand. There were further matters discussed by Captain Bozier in relation to security but I do not need to refer to them. They raise, however, considerations, which I have in any event taken into account in determining what I should do.
It will be seen that the decision which has to be made is an anxious one but, before I come finally to that matter, I should refer to some authorities. The matter of allowing a vessel under arrest to leave the Court's jurisdiction is discussed in The Bazias 3 [1993] QB 673. Two vessels were arrested. Both were cross channel ferries. The primary judge before whom the matter first came decided that the vessels should remain under arrest but should be at liberty to remain in service and operate out of the jurisdiction against undertakings given by the shipowners and the freighters, who had intervened in the proceedings. When the matter came before the Admiralty judge, Sheen J, he varied the order so as to require the vessels to return to or remain in the jurisdiction. The primary judge who had dealt with the matter was sitting in vacation and had made the orders which he made as a matter of urgency. He gave no reasons for his decision but there was a later application for leave to appeal from his order. On that occasion he said [1993] QB at 679 that the question whether the vessel should be released was touched on but in view of the urgency of the application before him nobody at that stage considered that the question was more than a technical point. The Court of Appeal took the view (at 679) that the vessels should have remained under arrest within the jurisdiction and not been allowed to move in and out of the jurisdiction as had been ordered.
Reference should also be made to the decision of the Court of Appeal in The "Myrto" [1978] 1 Lloyd's Rep. 11 which was an appeal from a decision of Brandon J (as he then was). Brandon J's judgment is summarised in the headnote of the case but, so far as I have been able to find out, is otherwise unreported. In that case a vessel, for reasons of convenience, was permitted, whilst under arrest, to proceed from Sunderland to the Port of London. Apparently it at all times remained in the jurisdiction of the Court. There was also a serious question about the unloading of cargo on that vessel. The judgment is instructive in relation to the present case, but it provides only an example of how a difficult problem such as arises in cases such as this may be solved.
More recently, in the "Iron Shortland" (1995) 131 ALR 738, I permitted a vessel whilst under arrest to continue to travel on its regular voyage between Port Hedland in north western Australia and Port Kembla on the south coast of New South Wales. The vessel regularly carried a cargo of iron ore from Port Hedland to Port Kembla. There were a number of considerations, some of them involving the public interest, which suggested that if the vessel could maintain its regular schedule a potentially serious situation involving a grave shortage of iron ore at the Port Kembla steelworks would be avoided. For understandable reasons the charterer of the vessel was unwilling to provide security for the vessel. After some discussion, the parties reached an agreement which I approved which enabled the vessel to keep operating. One of the terms of the agreement was that BHP would give its own undertaking to provide security for the value of the vessel in the event that any untoward event occurred in relation to it. BHP, of course, is a very large company which carries on a large number of enterprises both in and out of Australia. It is an Australian company. Here, although certain undertakings have been offered, and I shall refer to them again a little later, the undertakings offered, subject to one exception, have been undertakings of foreign companies not carrying on business in Australia and having no assets here. The undertakings are not supported by the provision of adequate, or indeed, any security.
Of course, it is probably correct to say that neither the voyage from Port Jackson to Port Botany, nor the voyage from Port Botany to the Port of Newcastle, would involve the vessel travelling outside the territorial limit of 12 miles. Nevertheless, the vessel will be on the open sea for some four or five hours at least and may have to cope with untoward weather on either leg of the voyage.
One of the matters I have taken into account in reaching my conclusion is the fact that the solicitor for the charterers has offered an undertaking to the Court personally to be responsible for the value of the vessel and the expenses incurred in relation to the voyages. Whilst I accept completely the good faith with which this undertaking has been given, it would involve the solicitor in a potential liability of over $US16,000,000. Moreover, I would not regard it as appropriate to take a security from him without ascertaining what claim the second mortgagee had in relation to the vessel. I appreciate that the undertaking is given on instructions, but there is a question whether the undertaking could be met in the event of a breach. The consequences of the breach may be serious for the solicitor but would nevertheless mean, perhaps, that the plaintiff would loose the security which it presently has. I do not feel able, therefore, to accept the undertaking.
The question then is what should be done. Having reflected on the matter, I have decided that I should permit the vessel to travel to Port Botany to unload the containers and liquid cargo. One factor that has persuaded me that this is the correct course is the evidence given on behalf of the shippers of the cargo of rice. It is important that this be shipped on another vessel due to leave Port Botany on 9 March. Unloading the cargo in Sydney may not enable this deadline to be met.
On the other hand, I have reached the clear conclusion that I should not allow the vessel to travel to Newcastle to unload the mineral sands. Comparatively unsatisfactory though the Sydney terminal may be for this purpose, Captain Bozier's report persuades me that, particularly if his suggestion of using containers is adopted, the risk of contamination will be greatly reduced. That coupled with the fact that there are the risks to which I have referred in relation to a voyage to and from Newcastle lead me to conclude that I ought not to permit that voyage to be undertaken.
In the result I propose to make directions to enable the vessel to travel to Port Botany to unload the containers and the liquid cargo. It will then need to return to Port Jackson to unload the mineral sands at the Conaust terminal and then return to an appropriate buoy in Sydney Harbour where it will remain until released from arrest or sold. I will require appropriate undertakings and the provision of satisfactory security for all fees and costs likely to be incurred in moving the vessel. If there is any question about the actual amount of these, a figure will have to be selected which will more than cover what is involved. Any dispute about the amounts can be dealt with on taxation or by the Court on an application for directions. The vessel will not be permitted to leave the harbour without there being on board a representative of the marshal, and if the marshal thinks it necessary, officers of the Australian Protective Service. The same will apply on the vessel's return to Port Jackson. Questions of the insurance of the various interests also need to be considered as well as one further question. I will need to be satisfied that after the cargo is unloaded, it will in fact be transhipped or moved to a satisfactory storage area at the expense of ABC or the cargo owners. Otherwise there is a risk that the cargo will be left to be moved by the marshal to the possible detriment of the plaintiff. There may be other matters to be considered which can be raised when the form of the Court's orders is discussed.
I will now hear submissions on the form of orders to be made.
I certify that this and the fourteen (14) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.
Associate
Dated
APPEARANCES
Sydney
Solicitor for the Applicant: Mr G. Farnsworth,
Mallesons Stephen Jaques
Melbourne
Counsel for the Applicant: Mr M. Thompson
Solicitors for the Applicant: Mallesons Stephen Jaques
Sydney
Solicitor for the Respondent: Mr S. Hetherington,
Ebsworth & Ebsworth
Melbourne
Counsel for the Respondent: Dr P. Buchanan, QC
Mr S. Horgan
Solicitors for the Respondent: Middletons Moore & Bevins
Applicants for discharge of cargo:
Ricegrowers Co-Operative Limited Mr J. Levingston,
Seatide Pty Ltd Levingstons
Caveator:
TNT Express (UK) Ltd Mr R. Drinnan,
Allen Allen & Hemsley
Dates of Hearing: 23, 24 and 27 February 1996, 1 and 5 March 1996.
Places of Hearing: Sydney and
Melbourne
Date of Judgment: 6 March 1996
0
0